New housing units scheduled for completion in the UAE over 2026–2027 are likely to be absorbed by the country’s robust population growth, limiting oversupply risks, according to S&P Global. Real estate prices have been rising since 2021, supported by population expansion, investor activity, and sustained foreign interest. However, the rating agency anticipates that demand growth and price increases will moderate over the next 12–24 months.
Banking sector exposure remains contained
S&P highlighted that the UAE’s open economy and high foreign investment in residential real estate make the sector sensitive to global economic trends. Nevertheless, the risk to banks is relatively contained, as most off-plan transactions are cash-based and only 30–40 percent of secondary sales are mortgage-financed. Moreover, banks’ exposure to real estate and construction has declined to 14 percent of total lending as of September 2025, down from 20 percent in 2021. Developers have strengthened cash flow through record revenue backlogs and accelerated collections, further reducing risk of a sharp market correction.
Downside risks and market outlook
Despite the overall stability, S&P noted increased downside risks from banks’ indirect exposure to real estate via SMEs and personal lending, although these remain relatively modest. Overall, the UAE residential market is expected to remain buoyant, with new supply largely absorbed by demographic growth and continued investor interest.
